With the country’s image seemingly soiled by the anti-immigrant attacks that have intensified in recent weeks, South Africa appears to be going through a rather rocky time.
Last week, the World Economic Forum on Africa met in Cape Town, South Africa. This was supposed to be President Cyril Ramaphosa’s chance to “sell” the country whose economic fortunes have dwindled in recent times.
But didn’t quite go as the President would have hoped. The continued xenophobic attacks in South Africa caused a number of African leaders and delegates to pull out of the event. That put a damper on things.
In essence, President Ramaphosa’s “big sale” was effectively thwarted by the continued domestic unrest in parts of South Africa and widespread concerns about the hostilities in South Africa.
And the troubles in South Africa seem to be taking a toll on the business end of things too. At least, that is what the numbers say.
Some data that have just emerged from within the country have it that South African business confidence has slumped to the lowest level since 1985 when UN-member states were directed to sever business ties with South Africa because of its apartheid policies.
This was part of the economic measures taken by the UN at the time to force South Africa into moving away from its stance on apartheid.
A sentiment index compiled by the South African Chamber of Commerce and Industry fell to 89.1 in August from 92 in July, and this is as per a statement released on Wednesday.
Just a week ago, South Africa appeared to have dodged a bullet when the latest economic data showed that the country had indeed avoided a second recession in as many years.
However, Africa’s most-industrialized economy is still stuck in the longest downward cycle since 1945, according to central bank data.
A combination of weak economic growth, rising debt and an alarming unemployment rate, continues to bedevil the country and raise tensions domestically. There have also been talks of seeking assistance from the International Monetary Fund.
Apparently, the ‘toxic’ business climate appears to be raising concerns. Indeed, a quarterly business confidence index compiled by FirstRand Ltd.’s Rand Merchant Bank unit and Stellenbosch University’s Bureau for Economic Research dropped to a two-decade low of 21 in the three months leading up to September, from 28 the previous quarter.
For the sake of perspective, the numbers suggest that eight out of every 10 businesses in South Africa are dissatisfied with prevailing business conditions.
When the Ramaphosa-led administration took office early last year, business sentiment skyrocketed to a two-year high. But all the early optimism has since ebbed away as the country continues to wobble from side to side while awaiting much-needed reforms across various sectors.